The US Dept. of Labor is moving to undo more regulations issued under the Trump administration, proposing to rescind a rule that seeks to define when individual workers should be classified as employees or independent contractors, and one that defines what constitutes a joint-employer situation, when two or more employers are liable for a worker's pay..

Worker classification is critically important because It can determine pay levels, including whether a worker must be paid time-and-a-half for overtime, and whether he or she will have employer-paid health insurance and other benefits.

Both rules implement provisions of the federal Fair Labor Standards Act,

[View Federal Register notice here.]

DOL's Wage and Hour Division said on March 11 it proposes to rescind the Jan. 7-issued Trump independent-contractor rule, citing several reasons.

DOL said the regulation established a new “economic reality test” for worker classification, which the courts and the department had not yet used, adding that the law itself and related case law do not support the test.

The joint employer regulation applies in cases where two or more companies interchange employees or where someone works for one company that is financially controlled by another.

DOL said it is also proposing to withdraw a Trump administration joint-employer regulation in effect since on March 16, 2020. The department said a federal district court last September vacated most of the rule as a violation of the Fair Labor Standars Act.  That case stemmed from a lawsuit filed by 17 states and Washington. D.C.

The department now seeks public comments on its two proposals through April 12.

Reactions to the proposals is divided along familiar lines. Construction contractor groups and congressional Republicans criticized the DOL actions. Construction unions and Democrats on Capitol Hill praised the moves.

ABC, AGC, GOP Lawmakers Oppose DOL Actions

Ben Brubeck, Associated Builders and Contractors vice president of regulatory, labor and state affairs, called the actions “disappointing,” noting that the group "strongly supported both [Trump] final rules because they promised to promote economic growth in the construction industry by providing greater clarity and removing unnecessary burdens on construction industry employers.”

Brian Turmail, an Associated General Contractors of America spokesman, said in a statement to ENR:  that DOL’s action “again adds an unknown period of uncertainty as yet another administration painstakingly rewrites the guidance for the third time in less than a decade. Employers seek consistency and clarity around these standards and definitions.”

The House Education and Labor Committee’s top Republican, Virginia Foxx (N.C.), and Rep. Fred Keller (Pa.), lead GOP member of the panel’s workforce protection subcommittee, said, “If finalized, these rules will allow the Biden administration to re-enact harmful Obama-era regulations which were confusing, unworkable and overly broad edicts that created uncertainty, confusion and legal jeopardy for small businesses and entrepreneurs."

Unions, Democrats Support DOL Proposals

Terry O’Sullivan, general president of the Laborers’ International Union of North America, said in a statement to ENR, “Irresponsible contractors regularly misclassify workers in order to escape responsibility for good wages and benefits,” which he said "is a pervasive problem on non-union projects.”

He praised DOL for “quickly taking steps to reverse rules that make it easier for bad actors to exploit workers through misclassification."

Sen. Sherrod Brown (D-Ohio) said in a statement to ENR, “I’m glad to see the Dept. of Labor standing up for workers who have been misclassified.”

He added, “We need stronger workplace standards to make sure workers get the pay they earned, and we should go after corporations that misclassify their workers – pretending they’re independent contractors just so they can avoid paying their fair share of taxes and wages.”